Based on the financial information provided, calculate the following ratios and explain their purpose: current ratio inventory turnover ratio accounts receivable turnover ratio debt to equity ratio return on assets ratio asset turnover ratio return on equity ratio profit margin ratio price-earnings ratio dividend yield ratio note: when a balance sheet amount is related to an income statement amount in computing a ratio, the balance sheet amount should be an average of that period. The average is calculated by adding the ending balances of this year and last year and dividing the result by

Describe how a bank lending officer might use ratio analysis. Select five ratios that would be most useful for the purpose and explain the rationale for your selection.

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Cash Receivables Inventories Other Current Assets Total Current Assets Plant and Equipment Other Long-Term Assets Total Assets Accounts Payable Other Current Liabilities Total Current Liabilities Long Term Debt Other Long Term Liabilities Preferred Stock Shareholders' Equity Total Liabilities and Shareholders' Equity 12/31/2010 Amount in Dollars 200.00 500.00 750.00 100.00 1,550.00 1,100.00 150.00 2,800.00 510.00 25.00 535.00 375.00 225.00 250.00 1,415.00 2,800.00 12/31/2009 Amount in Dollars 150.00 350.00 755.00 75.00 1,330.00 1,170.00 100.00 2,600.00 400.00 25.00 425.00 400.00 175.00 250.00 1,350.00 2,600.00 Net Sales Cost of Goods Sold Other Expenses Depreciation Interest Expenses Tax Net Income Preferred Stock Dividend Common Stock Dividends Market Value of Equity Average Number of Shares Share Price Dividends per Share Earnings per Share Year-2010 Year-2009 Amount in Dollars 3500.00 3200.00 2200.00 2100.00 300.00 250.00 77.00 62.00 40.00 46.00 200.00 150.00 683.00 592.00 25.00 260.00 4000.00 100.00 40.00 2.60 6.58 Cash Receivables Inventories Other Current Assets Total Current Assets Plant and Equipment Other Long-Term Assets Total Assets Accounts Payable Other Current Liabilities Total Current Liabilities Long Term Debt Other Long Term Liabilities Preferred Stock Shareholders' Equity Total Liabilities and Shareholders' Equity 12/31/2010 Amount in Dollars 200.00 500.00 750.00 100.00 1,550.00 1,100.00 150.00 2,800.00 510.00 25.00 535.00 375.00 225.00 250.00 1,415.00 2,800.00 12/31/2009 Amount in Dollars 150.00 350.00 755.00 75.00 1,330.00 1,170.00 100.00 2,600.00 400.00 25.00 425.00 400.00 175.00 250.00 1,350.00 2,600.00 Net Sales Cost of Goods Sold Other Expenses Depreciation Interest Expenses Tax Net Income Preferred Stock Dividend Common Stock Dividends Market Value of Equity Average Number of Shares Share Price Dividends per Share Earnings per Share Year-2010 Year-2009 Amount in Dollars 3500.00 3200.00 2200.00 2100.00 300.00 250.00 77.00 62.00 40.00 46.00 200.00 150.00 683.00 592.00 25.00 260.00 4000.00 100.00 40.00 2.60 6.58

Answer rating: 100% (QA)

Ratio Analysis Current Ratio Total Current Asset Total Current Liabilities 31122010 31122009 1550525 1330425 290 313 Inventory Turnover Ratio Cost of ... View the full answer